The Troubled Status of WTO Doha Round Negotiations
An atmosphere of crisis has recently emerged in Geneva as to the developments of the World Trade Organization's Doha Round negotiations. Since its dramatic launch at Doha, Qatar, in 2001 against the background of September 11 terrorist attacks, the Doha Round negotiations have produced little as the Hong Kong Ministerial Conference scheduled in December approaches. The negotiations are still in a stalemate over the usual suspect, agriculture, and there have been no breakthroughs in other important areas such as services and industrial tariffs. This situation is reminiscent of the Seattle Ministerial Conference in 1999 as well as the Cancún Ministerial Conference in 2003. The out-going World Trade Organization (WTO) Director-General, Supachai Panitchpakdi, has warned that "these negotiations are in trouble."[1]
Background
The WTO Agreement, which was an epoch-making achievement of the Uruguay Round (UR) negotiations from 1987 to 1994, regularized a WTO Ministerial Conference as a main forum for trade negotiations, convening at least bi-annually.[2] The first two Ministerial Conferences held in Singapore and Geneva in 1996 and 1998, respectively, sent a propitious signal to the global trading community by declaring Members' firm commitments on further trade liberalization in nascent areas such as information technology products[3] and electronic commerce.[4] Yet, a chasm between developed and developing countries had gradually surfaced centering on sensitive areas such as agricultural and textile products, and finally precipitated, in combination with other logistical problems, the failure of the Seattle Ministerial Conference in 1999.[5]
Amid the Seattle hangover, worsening global poverty in the advent of the new millennium led WTO Members to focus on development issues in trade negotiations. Furthermore, September 11 terrorist attacks pressured trade delegates at the Doha Ministerial Conference to work toward a meaningful outcome.[6] The Doha Development Agenda (DDA) was created in this powerful background. Nonetheless, although Members could build consensus in Doha on broad principles, e.g., to reduce and eventually eliminate agricultural subsidies, they could not further agree on how these principles would be implemented and attained in subsequent negotiations. Thus, the Cancún Ministerial Conference collapsed in September 2003 mainly due to the irreconcilable divergence between rich and poor countries' position on the reduction of farm subsidies.[7]
Post-Cancún Developments
After Cancún, the Doha Round negotiations were largely dormant until August 1, 2004, when the WTO General Council issued the Doha Work Program which constituted a basic architecture for ensuing negotiations.[8] The Work Program designated several critical areas of negotiations, such as agriculture, non-agricultural market access (NAMA), and services, which should be prioritized. Although the Work Program was widely welcomed as a breakthrough, it has thus far failed to generate any substantial negotiating achievements. Developed and developing countries have yet to narrow their diverging positions on three major issues, i.e., agricultural protection, industrial tariff reduction, and liberalization of trade in services.[9] Overall, most developing countries, except for ones which import food, push the dismantling of farm subsidies in rich countries and further market access via agricultural tariff reduction, while developed countries want to improve their own access to developing countries' markets for industrial goods and services.
Although a bargain between developed and developing countries seems quite likely considering their wish lists, they still have not been able to break a deal. Ever since the collapse of the Cancún Ministerial Conference, developed countries have continuously been urged to scale down their lavish farm subsidies. In particular, the recent G-8 Summit in Gleneagles further highlighted the developmental importance of agricultural trade liberalization.[10] Yet, developed countries are adamant in that they cannot unilaterally take actions in this line without any reciprocal concessions from developing countries on industrial tariffs and services,[11] demonstrating a disconnect between the tone of the G-8 Summit and actual negotiating stances at the working level in Geneva.[12] Developing countries are also reluctant to make first moves in these areas until they secure material commitments from developed countries in the area of agricultural protection.[13] It is this brinkmanship[14] which attenuates the possibility of a July Approximation, which refers to a preliminary deal on crucial issues among trade negotiators to facilitate a final delivery at the upcoming Hong Kong Ministerial Conference in December.[15]
On July 12-13, 2005, trade ministers from thirty major WTO Members gathered in Dalian, China, to revitalize the languished Doha Round negotiations. In this mini-Ministerial Meeting, the U.S. and the EU accepted a proposal on the basic formula of agricultural tariff reduction from a group of major developing countries (G-20), including Brazil, India and China.[16] Although this might be interpreted as a step forward in that the US and agricultural exporters had originally preferred a stricter formula dictating steeper cuts on high tariffs,[17] Members did not even start to work on actual terms of tariff reductions, i.e., how much tariff cuts would be applied to which products. Furthermore, negotiations on industrial tariffs and services failed to produce any meaningful results.[18] At the end of the Dalian meeting, WTO Director-General Supachai expressed "grave concern" on the status of Doha negotiations.[19]
Even a faintly remaining hope for the July Approximation eventually evaporated in the last week of July when the final attempt in Geneva to seal a package deal on the framework for future negotiations fell apart.[20] Major players did not move from their original positions: the EU refused to undertake actual cuts in agricultural tariffs; the US declined to reduce farm subsidies; key developing countries, such as Brazil, India and China, resisted making any substantial concessions on industrial tariffs and services in the face of the EU and the US' lack of commitments in the agricultural sector.[21]
Prospects
Having failed to achieve the July Approximation, overall prospects for a successful conclusion of the Hong Kong Ministerial Conference in December may not be bright. When negotiations are resumed in Geneva after the August recess, negotiators will be confronted with a daunting challenge of wrapping up negotiations on highly sensitive issues, such as actual sizes of tariff cuts as well as an end date for the elimination of all export subsidies on agricultural products, within only three months. Although it seems vain to predict the final destiny of the December meeting in Hong Kong, one may at least list certain factors, positive and negative, which would affect the outcome.
As for the first positive factor, the US President's fast track authority, which will expire in July 2007, is not likely to be renewed considering the protectionist atmosphere currently prevailing in the Congress.[22] Ironically, this prospect tends to push Members to strike a deal in December so that the Doha Round package agreed at the end of 2005 can be approved by the US Congress under the fast track procedure in early 2007 after necessary wrap-up negotiations in 2006.[23] It is unthinkable that the Doha Round package, if any, would enter into force without US participation. Yet, without the fast track authority, congressional bottling-ups are likely to undermine such package.
Second, the newly chosen WTO Director-General Pascal Lamy is expected to play a critical role in not only administering but also leading remaining talks, taking into account his professional caliber as well as connections from his past career as the EU's trade commissioner.
Third, the UN Development Summit scheduled in September[24] will further highlight the development aspect of Doha Round negotiations, pressuring rich countries to deliver their previous commitments on agricultural trade liberalization in the form of concrete concessions.
On the other hand, negative factors also loom ahead. Most of all, protectionist sentiments have recently prevailed both in the U.S. and the EU. It has been argued that the recent negative outcomes of the referenda on the European Constitution in major EU Member States are linked to peoples' concerns about free trade when they witness effects such as job loss.[25] On the US side, the Central American Free Trade Agreement (CAFTA), which has recently been passed by a slim margin,[26] may have exhausted political capital which would be needed to push through any future Doha deal in the Congress.
In conclusion, the success of the Doha Round now hinges on three months' negotiations starting in September and running up to the Hong Kong Ministerial Conference in December. Unless Members strike a substantial and encompassing deal over major issues ? agricultural protection, industrial tariffs, and services - during these three months, the specter of Seattle and Cancún will remain at large.[27]
About the author
Sungjoon Cho, an ASIL member, is an Assistant Professor of Law at Chicago-Kent College of Law, Illinois Institute of Technology. During the period of 1994-96, he represented the government of South Korea in negotiations under the World Trade Organization and the Organization for Economic Cooperation and Development. He is the author of Free Markets and Social Regulation: A Reform Agenda of the Global Trading System (Kluwer Law International, 2003).
Footnotes
[1] WTO News, "These Negotiations are In Trouble," July 8, 2005, http://www.wto.org/english/news_e/spsp_e/spsp40_e.htm.
[2] Marrakech Agreement Establishing the World Trade Organization, April 15, 1994, Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, art. IV, para. 1.
[3] WTO, Ministerial Declaration on Trade in Information Technology Products, Singapore, Dec. 13, 1996, WT/MIN(96)/16.
[4] WTO, Declaration on Global Economic Commerce, adopted on May 20, 1998, WT/MIN(98)/DEC/2.
[5] See Sungjoon Cho, A Bridge Too Far: The Fall of the Fifth WTO Ministerial Conference in Cancún and the Future of Trade Constitution, 7 J. Int'l Econ. L. 219, 222-24 (2004).
[6] Id., at 224-25.
[7] Id., at 227-29.
[8] WTO, Doha Work Program: Decision Adopted by the General Council on 1 August 2004, WT/L/579, Aug. 2, 2004, http://www.wto.org/english/tratop_e/dda_e/ddadraft_31jul04_e.pdf. See also WTO: July Framework Agreed at Eleventh Hour, Bridges Weekly Trade News Digest, vol. 8, No. 27, Aug. 3, 2004.
[9] See e.g., Alan Beattie, Services Prove to Be the Latest Sticking Point in Doha Trade Negotiations, Fin. Times, Feb. 10, 2005, at 6.
[10] See Chairman's Summary, Gleneagles Summit, July 8, 2005, http://www.g8.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/Show
Page&c=Page&cid=1119518698846.
[11] See G8 Agrees on Aid, Trade - But, is it enough?, Bridges Weekly Trade News Digest, vol. 9, No. 25, July 13, 2005.
[12] See Alan Beattie, G8 Mood and Doha Talks "Show Disconnect," Fin. Times, July 10, 2005, at 4.
[13] See Members Try to Convert Dalian Effort into Negotiations Breakthrough, Bridges Weekly Trade News Digest, vol. 9, No. 26, July 20, 2005.
[14] See The Doha Round Cruises Along, Fin. Times, July 15, 2005, at 12.
[15] See Daniel Pruzin, WTO Agriculture Chair Outlines Goals for July Approximation, Cites Market Access, Int'l Trade Rep. , vol. 22, No. 27, at 1106-07, Jul. 7, 2005.
[16] See Dalian: Ministers Recommit to Doha Round, But Skepticism Abounds, Bridges Weekly Trade News Digest, vol. 9, No. 25, July 13, 2005 [hereinafter Skepticism Abounds].
[17] See Dalian: Hint of Progress on Agriculture, Bridges Weekly Trade News Digest, vol. 9, No. 25, July 13, 2005.
[18] See Skepticism Abounds, supra note 16.
[19] Id.
[20] Alan Beattie & Frances Williams, Prospects for WTO Gloomier as Talks End, Fin. Times, July 27, 2005, at 6.
[21] Id.
[22] See Alan Beattie, Waning Expectations: Agreement on Trade Remains Remote as Time Trickles Away, Fin. Times, July 18, 2005, at 11.
[23] See Sungjoon Cho, Conventional Wisdom No Longer Applies at WTO, Fin. Times, May 7, 2005.
[24] See UN News Center, UN Summit Meeting in 2005 to Review Progress towards Global Anti-Poverty Goals, Dec. 17, 2004,
[25] See Raphael Minder et al., Concern about Return of "Old Demon" Protectionism, Fin. Times, May 31, 2005, at 4.
[26] See Edmund L. Andrews, House Approves Free Trade Pact, N.Y. Times, July 28, 2005.
[27] See generally WTO Trade Negotiations Committee, Report by the Chairman of the Trade Negotiations Committee to the General Council, TN/C/5, July 28, 2005.